Colin Campbell's Response to the Guardian IEA Reporting

[GliderGuider]

Colin says some very interesting things about the earlier days of his oil analysis career, followed by his assessment of where we are today.

Colin Campbell's Response to the Guardian IEA Reporting

I can provide you with some more information on the topic, touching on my own experience. I first became aware of the issue in 1969 in Chicago when I was part of a team making a world evaluation for Amoco (now part of BP). Later when I was managing Fina in Norway, I had the company sponsor a research project on the subject with the Norwegian authorities. We used public reserve data, as I had not then appreciated how unreliable they were.

The results were published as The Golden Century of Oil 1950-2050 (Kluwer Academic). This attracted the interest of Petroconsultants, a company based in Geneva that was used by the international oil companies to assemble a valid database on oil activities around the world including the size of discoveries and drilling statistics. They invited me to redo the study but this time using their comprehensive database of virtually all the world’s fields. I was joined in this project by Jean Laherrère, formerly Exploration Manager of the French oil company TOTAL, who had developed various analytical techniques. The resulting study was published at $50,000 a copy, but was later suppressed under pressure from a major US oil company, which had better remain nameless. However, Petroconsultants co-published a book, The Coming Oil Crisis (Multi-Science), which I wrote summarising the results, and also agreed that Laherrère and I should accept an invitation to write an article for the Scientific American : The End of Cheap Oil (March 1998).

....................

Briefly, Regular Conventional Oil peaked in 2005. The shortfall was made good by expensive oil mainly from deepwater fields and Canadian tarsands, which led to rising prices. This trend was spotted by shrewd traders who started buying contracts on the Futures Market, while the industry maintained high levels of storage, watching it appreciate in value at no cost or effort. The rising prices also delivered a flood of petrodollars to the Middle East where it still costs on average about $10 to produce a barrel. The surplus was in turn partly returned to Western financial institutions, contributing to their instability. The surge in price reached extreme levels in mid 2008, approaching $150 a barrel, which prompted the shrewd traders to start selling short on the Futures Market and for the industry to start draining their tanks before they lost value. The high prices in parallel triggered an economic recession which dampened demand causing prices to fall back to 2005 levels before edging up to around $75 today.

It is more difficult to evaluate the Non-Conventional oils, comprising tarsands and heavy oils, deepwater oil, Polar oil and Natural Gas Liquids, but the above graph suggests that the peak of all categories was passed in 2008. A debate rages as to the precise date of overall peak but rather misses the point when what matters is the vision of long decline on the other side of it.

Given the central role of oil in the modern economy, the peak of production promises to be a turning point of historical magnitude. It seems that banks have been lending more than they had on deposit, confident that Tomorrow’s Economic Growth was collateral for Today’s Debt, without recognising that the expansion was fuelled by cheap oil-based energy. The Governments are now printing yet more money under Keynesian principles in the hope of restoring past prosperity, which may meet with a brief success. But if it does, it would stimulate the demand for oil that would again soon breach the supply limits, leading to another price shock and an even worse consequent economic depression. In fact, today 28 billion barrels a year support a world population on 6.7 billion people, but by 2050 the supply will have fallen to a level able to support less than half that number in their present way of life.

[Nederland]

1. Why anyone listens to Campbell is a mystery

The man has a long track record of being wrong. In 1986 he predicted that non-OPEN oil production would peak in 1987. He was wrong. In 1991 he predicted that global oil production would plateau in 1992 and start declining in 1997. He was wrong. In 1997 he predicted that global oil production would plateau in 1998 and start declining in 2008. He was wrong.

A good analysis of why Campbell is always wrong and why he methodologies are flawed is here: http://sepwww.stanford.edu/sep/jon/world-oil.dir/lynch/worldoil.html

[GliderGuider]

2. Michael Lynch.

The James Inhofe of Peak Oil. Right-o then!

[Nederland]

3. True

But what he says about Campbell is accurate. You can believe in Peak Oil and still think Campbell is an idiot.

[GliderGuider]

4. Let me ask you this

If I published an article by James Hanson about the risks of climate change, would I also need to refute all of Inhofe's critiques? Campbell's work has been evaluated and accepted by people far more accomplished than I. He has continued to refine his assessments over time, as behooves any intellectually honest analyst. The Lynch article you point to is over 10 years old, and criticizes Campbell's earlier work, from a time when, as he himself admits, he didn't realize how unreliable the underlying data was. And this was when he was managing a major oil company.

Lynch is a shill for the oil industry. He has no credibility whatsoever in my eyes.

[Nederland]

5. Hanson hasn't been wrong numerous times

His predictions are largely accurate, therefore when he says something I tend to listen.

[GliderGuider]

6. Find a critique of Campbell that less than 10 years old

and is done by someone without such an obvious axe to grind. Then come back and try me again.

[Nederland]

7. There aren't any

...because serious people gave up on Campbell ten years ago.

[GliderGuider]

8. I'll accept your subject line

But the body of your message is speculation and projection. You have no way of knowing why there have been no recent critiques of Campbell. All we know is that there haven't been any. IMO he's enough of an eminence grise in the PO world to make a successful attack on him very attractive to TPTB. That makes the silence of the last 10 years even more deafening.